EX-99.1 2 ex-991.htm EXHIBIT 99.1 Exhibit



libbeylogoa29.jpg
Libbey Inc.
300 Madison Ave
Toledo, OH 43699
 
 
NEWS RELEASE

CORPORATE CONTACTS:
 
INVESTOR INQUIRIES:
Joe Huhn, Vice President, Investor Relations
 
Chris Hodges or Sam Gibbons
(419) 325-2205
 
Alpha IR Group
jhuhn@libbey.com
 
(312) 445-2870
 
 
LBY@alpha-ir.com
Jamie Burt, Media
 
 
(419) 325-2672
 
 
jburt@libbey.com
 
 

FOR IMMEDIATE RELEASE
TUESDAY, FEBRUARY 27, 2018

LIBBEY INC. ANNOUNCES FOURTH QUARTER AND
FULL-YEAR 2017 FINANCIAL RESULTS
 
Company reports fourth quarter net sales growth of 8.8%; introduces fiscal year 2018 outlook

TOLEDO, OHIO, February 27, 2018--Libbey Inc. (NYSE American: LBY), one of the largest glass tableware manufacturers in the world, today reported results for the fourth quarter ended December 31, 2017.

Fourth Quarter Financial & Operating Highlights

•
Net sales in the fourth quarter of 2017 were $224.0 million, compared to $205.8 million in the prior-year fourth quarter, an 8.8 percent increase (or an increase of 6.7 percent, excluding a $4.4 million currency impact.)
•
Net loss in the fourth quarter 2017 was $7.2 million, compared to a net loss of $2.2 million in fourth quarter 2016. The fourth quarter 2017 included a $6.7 million unfavorable revaluation of net deferred tax assets as a result of the latest U.S. tax reform.
•
Adjusted EBITDA (see Table 1) in fourth quarter 2017 was $24.2 million, including a $2.8 million unfavorable currency impact related to the Company's tax provision, compared to $23.5 million in fourth quarter 2016.


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“We were pleased to see the business return to sales growth during the fourth quarter. This and several other performance indicators give us confidence that our strategies to drive long-term, profitable growth are gaining traction," said Chief Executive Officer William Foley. "We saw improved sales contributions from both our new e-commerce platform and new products during the fourth quarter. Profitability in our EMEA and Latin America segments also improved for a second consecutive quarter, and we're continuing to implement additional opportunities to improve our margin profile."
Three months ended December 31,
(dollars in thousands)
 
Net Sales
 
Increase/(Decrease)
 
Currency Effects
 
Constant Currency Sales Growth (Decline)
 
 
2017
 
2016
 
$ Change
 
% Change
 
 
U.S. & Canada
 
$
138,345

 
$
127,915

 
$
10,430

 
8.2
 %
 
$
924

 
7.4
 %
Latin America
 
41,758

 
36,418

 
5,340

 
14.7
 %
 
1,228

 
11.3
 %
EMEA
 
36,796

 
33,533

 
3,263

 
9.7
 %
 
1,860

 
4.2
 %
Other
 
7,082

 
7,972

 
(890
)
 
(11.2
)%
 
402

 
(16.2
)%
Consolidated
 
$
223,981

 
$
205,838

 
$
18,143

 
8.8
 %
 
$
4,414

 
6.7
 %

•
Net sales in the U.S. and Canada segment increased 8.2 percent, driven by segment volume and favorable price and mix of product sold in the foodservice channel.
•
In Latin America, net sales increased 14.7 percent (an increase of 11.3 percent excluding currency fluctuation) as a result of higher net sales in the business-to-business and retail channels, primarily due to favorable price and mix of product sold and a favorable currency impact, partially offset by expected lower volume as a result of margin improvement initiatives.
•
Net sales in the EMEA segment were favorably impacted by price and mix of product sold in the foodservice and retail channels, as well as a $1.9 million favorable currency impact for the fourth quarter of 2017 versus the prior-year quarter.
•
Net sales in Other were down primarily as a result of lower sales in China.
•
The Company’s effective tax rate was 202.4 percent for the fourth quarter of 2017, compared to 165.0 percent in the prior-year quarter. The high effective tax rates relative to the U.S. statutory rate of 35 percent were driven by several items, including a 2017 charge of $6.7 million related to the revaluation of net deferred tax assets caused by the U.S. tax reform, low pretax income relative to unfavorable tax adjustments for non-deductible expenses, the timing and mix of pretax income earned in tax jurisdictions with varying tax rates, and the impact of foreign exchange gains and losses.


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Full Year 2017 Financial & Operating Highlights
•
Net sales for full-year 2017 were $781.8 million, compared to $793.4 million for full-year 2016, a decrease of 1.5 percent (or a decrease of 1.6 percent excluding the $1.1 million currency impact).
•
Net loss for full-year 2017 was $93.4 million, compared to net income of $10.1 million during full-year 2016; 2017 included a $79.7 million non-cash goodwill impairment charge associated with the Latin America segment, and a $6.7 million charge related to the revaluation of net deferred tax assets as a result of the latest U.S. tax reform.
•
Adjusted EBITDA (see Table 1) was $70.6 million for full-year 2017, compared to $111.6 million for full-year 2016.
Full Year ended December 31,
 
Net Sales
 
Increase/(Decrease)
 
Currency Effects
 
Constant Currency Sales Growth (Decline)
(dollars in thousands)
 
2017
 
2016
 
$ Change
 
% Change
 
 
U.S. & Canada
 
$
481,797

 
$
482,296

 
$
(499
)
 
(0.1
)%
 
$
3,416

 
(0.8
)%
Latin America
 
144,322

 
151,389

 
(7,067
)
 
(4.7
)%
 
(1,280
)
 
(3.8
)%
EMEA
 
126,924

 
126,591

 
333

 
0.3
 %
 
(1,433
)
 
1.4
 %
Other
 
28,785

 
33,144

 
(4,359
)
 
(13.2
)%
 
398

 
(14.4
)%
Consolidated
 
$
781,828

 
$
793,420

 
$
(11,592
)
 
(1.5
)%
 
$
1,101

 
(1.6
)%

•
Net sales in the U.S. and Canada segment were lower due to lower price and mix of product sold, partially offset by increased volumes and a favorable currency impact.
•
In Latin America, net sales declined as a result of lower net sales across the retail and business-to-business channels, specifically due to lower volume and unfavorable currency. The decline was partially offset by favorable price and mix.
•
Net sales in the EMEA segment increased primarily as a result of favorable price and mix of product sold, partially offset by lower volumes and an unfavorable currency impact.
•
Net sales in Other were down primarily as a result of lower sales in China.
•
The Company’s effective tax rate was (20.4) percent for 2017, compared to 63.7 percent in the year-ago period. The change in the effective tax rate was driven by several items, including the non-deductible goodwill impairment charge, a 2017 charge of $6.7 million related to the revaluation of net deferred tax assets caused by the U.S. tax reform, low pretax income relative to unfavorable tax adjustments for non-deductible expenses, the timing and mix of pretax income earned in tax jurisdictions with varying tax rates, and the impact of foreign exchange losses compared to gains in the prior period.

Balance Sheet and Liquidity
•
The Company had available capacity of $91.9 million under its ABL credit facility at December 31, 2017, with no loans outstanding and cash on hand of $24.7 million.
•
At December 31, 2017, Trade Working Capital (see Table 3), defined as inventories and accounts receivable less accounts payable, was $199.5 million, an increase of $16.0 million from $183.5 million at December 31, 2016. The increase was a result of higher inventories and higher accounts receivable, partially offset by higher accounts payable. $7.8 million of the increase in Trade Working Capital was attributable to the effect of currency.


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Outlook
The Company is anticipating improved global macroeconomic conditions in 2018. In addition, the Company expects that our industry and competitive trends will improve, but remain challenged. As such, outlook for full-year 2018 includes the following:
•
Net sales increase in the low single digits, compared to the full-year 2017, on a reported basis
•
Adjusted EBITDA margins of 10 percent to 11 percent (see Table 6)
•
Capital expenditures in the range of $50 million to $55 million
•
Selling, general and administrative expense as a percent of net sales around 17 percent
For the first half of 2018, the Company projects the following:
•
Net sales increase in the low single digits, when compared to the first half of 2017, on a reported basis
•
Adjusted EBITDA margins of 8.5 percent to 9.5 percent (see Table 6)
Jim Burmeister, vice president, chief financial officer, commented, "We successfully amended and extended our ABL credit facility during the fourth quarter and our liquidity remains strong. Over the course of fiscal year 2017, we paid $24.4 million on our Term Loan B debt, and plan to continue to prioritize debt reduction with excess cash flow over the near-term horizon."

Webcast Information
Libbey will hold a conference call for investors on Tuesday, February 27, 2018, at 11 a.m. Eastern Standard Time. The conference call will be webcast live on the Internet and is accessible from the Investor Relations section of www.libbey.com. To listen to the call, please go to the website at least 10 minutes early to register, download and install any necessary software.

About Libbey Inc.
Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey's global brand portfolio, in addition to its namesake brand, includes Libbey Signature®, Master's Reserve®, Crisa®, Royal Leerdam®, World® Tableware, Syracuse® China, and Crisal Glass®. In 2017, Libbey Inc.'s net sales totaled $781.8 million. Additional information is available at www.libbey.com.

Use of Non-GAAP Financial Measures
To supplement the condensed financial statements presented in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP), we use non-GAAP measures of certain components of financial performance. These non-GAAP measures include Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow, Trade Working Capital, Adjusted Selling, General & Administrative Expense (Adjusted SG&A), Adjusted SG&A Margin and our Debt Net of Cash to Adjusted EBITDA Ratio. Reconciliations to the nearest U.S. GAAP measures of all non-GAAP measures included in this press release can be found in the tables below.

Our non-GAAP measures, as defined below, are used by analysts, investors and other interested parties to compare our performance with the performance of other companies that report similar non-GAAP measures. Libbey believes these non-GAAP measures provide meaningful supplemental information regarding financial performance by excluding certain expenses and benefits that may not be indicative of core business operating results. We believe the non-GAAP measures, when viewed in conjunction with U.S. GAAP results and the accompanying reconciliations, enhance the comparability of results against prior periods and allow for additional transparency of financial results and business outlook. In addition, we use non-GAAP data internally to assess performance and facilitate management's internal comparison of our financial performance to that of prior

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periods, as well as trend analysis for budgeting and planning purposes. The presentation of our non-GAAP measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Furthermore, our non-GAAP measures may not be comparable to similarly titled measures reported by other companies and may have limitations as an analytical tool. We define our non-GAAP measures as follows:

•
We define Adjusted EBITDA and Adjusted EBITDA Margin as U.S. GAAP net income (loss) plus interest expense, provision for income taxes, depreciation and amortization, and special items that Libbey believes are not reflective of our core operating performance.

•
We define Trade Working Capital as net accounts receivable plus net inventories less accounts payable.

•
We define Adjusted SG&A and Adjusted SG&A Margin as U.S. GAAP selling, general and administrative expenses less special items that Libbey believes are not reflective of our core operating performance.

•
We define our Debt Net of Cash to Adjusted EBITDA Ratio as gross debt before unamortized discount and finance fees, less cash and cash equivalents, divided by Adjusted EBITDA (defined above).

Constant Currency
We translate revenue and expense accounts in our non-U.S. operations at current average exchange rates during the year. References to "constant currency," "excluding currency impact" and "adjusted for currency" are considered non-GAAP measures. Constant currency references regarding net sales reflect a simple mathematical translation of local currency results using the comparable prior period’s currency conversion rate. Constant currency references regarding Adjusted EBITDA and Adjusted EBITDA Margin comprise a simple mathematical translation of local currency results using the comparable prior period's currency conversion rate plus the transactional impact of changes in exchange rates from revenues, expenses and assets and liabilities that are denominated in a currency other than the functional currency. We believe this non-GAAP constant currency information provides valuable supplemental information regarding our core operating results, better identifies operating trends that may otherwise be masked or distorted by exchange rate changes and provides a higher degree of transparency of information used by management in its evaluation of our ongoing operations. These non-GAAP measures should be viewed in addition to, and not as an alternative to, the reported results prepared in accordance with U.S. GAAP. Our currency market risks include currency fluctuations relative to the U.S. dollar, Canadian dollar, Mexican peso, euro and RMB.

Caution on Forward-Looking Statements
This press release includes forward-looking statements as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements reflect only the Company's best assessment at this time and are indicated by words or phrases such as "goal," "expects," " believes," "will," "estimates," "anticipates," or similar phrases. Investors are cautioned that forward-looking statements involve risks and uncertainty and that actual results may differ materially from these statements. Investors should not place undue reliance on such statements. These forward-looking statements may be affected by the risks and uncertainties in the Company's business. This information is qualified in its entirety by cautionary statements and risk factor disclosures contained in the Company's Securities and Exchange Commission filings, including the Company's report on Form 10-K filed with the Commission on March 3, 2017. Important factors potentially affecting performance include but are not limited to risks related to increased competition from foreign suppliers endeavoring to sell glass tableware, ceramic dinnerware and metalware in our core markets; global economic conditions and the related impact on consumer spending levels; changes in trends in the restaurant and bar industry and the retail channel of distribution that impact demand for our products; major slowdowns in the retail, travel or entertainment industries in the United States, Canada, Mexico, Western Europe and Asia, caused by terrorist attacks or otherwise; significant increases in per-unit costs for natural gas, electricity, freight, corrugated packaging, and other purchased materials; our ability to borrow under our ABL credit agreement;

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high levels of indebtedness; high interest rates that increase the Company's borrowing costs or volatility in the financial markets that could constrain liquidity and credit availability; protracted work stoppages related to collective bargaining agreements; increases in expense associated with higher medical costs, increased pension expense associated with lower returns on pension investments and increased pension obligations; devaluations and other major currency fluctuations relative to the U.S. dollar and the euro that could reduce the cost competitiveness of the Company's products compared to foreign competition; the effect of exchange rate changes to the value of the euro, the Mexican peso, the RMB and the Canadian dollar and the earnings and cash flows of our international operations, expressed under U.S. GAAP; the effect of high levels of inflation in countries in which we operate or sell our products; and the inability to achieve savings and profit improvements at targeted levels in the Company's operations or within the intended time periods. Any forward-looking statements speak only as of the date of this press release, and the Company assumes no obligation to update or revise any forward-looking statement to reflect events or circumstances arising after the date of this press release.

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Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
(unaudited)

 
Three months ended December 31,
 
2017
 
2016
 
 
 
 
Net sales
$
223,981

 
$
205,838

Freight billed to customers
847

 
807

Total revenues
224,828

 
206,645

Cost of sales
182,144

 
172,618

Gross profit
42,684

 
34,027

Selling, general and administrative expenses
29,193

 
27,636

Income from operations
13,491

 
6,391

Other income (expense)
(1,232
)
 
2,327

Earnings before interest and income taxes
12,259

 
8,718

Interest expense
5,277

 
5,259

Income before income taxes
6,982

 
3,459

Provision for income taxes
14,133

 
5,708

Net loss
$
(7,151
)
 
$
(2,249
)
 
 
 
 
Net loss per share:
 
 
 
    Basic
$
(0.32
)
 
$
(0.10
)
    Diluted
$
(0.32
)
 
$
(0.10
)
Dividends declared per share
$
0.1175

 
$
0.1150

 
 
 
 
Weighted average shares:
 
 
 
    Basic
22,078

 
21,908

    Diluted
22,078

 
21,908






Libbey Inc.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts)

 
 
 
 
 
Year ended December 31,
 
2017
 
2016
 
(unaudited)
 
 
Net sales
$
781,828

 
$
793,420

Freight billed to customers
3,328

 
2,790

Total revenues
785,156

 
796,210

Cost of sales
634,185

 
629,916

Gross profit
150,971

 
166,294

Selling, general and administrative expenses
124,926

 
120,984

Goodwill impairment
79,700

 
—

Income (loss) from operations
(53,655
)
 
45,310

Other income (expense)
(3,515
)
 
3,362

Earnings (loss) before interest and income taxes
(57,170
)
 
48,672

Interest expense
20,400

 
20,888

Income (loss) before income taxes
(77,570
)
 
27,784

Provision for income taxes
15,798

 
17,711

Net income (loss)
$
(93,368
)
 
$
10,073

 
 
 
 
Net income (loss) per share:
 
 
 
    Basic
$
(4.24
)
 
$
0.46

    Diluted
$
(4.24
)
 
$
0.46

Dividends declared per share
$
0.47

 
$
0.46

 
 
 
 
Weighted average shares:
 
 
 
    Basic
22,031

 
21,880

    Diluted
22,031

 
22,049

 
 
 
 



Libbey Inc.
Condensed Consolidated Balance Sheets
(dollars in thousands)
 
December 31, 2017
 
December 31, 2016
 
(unaudited)
 
 
ASSETS:
 
 
 
Cash and cash equivalents
$
24,696

 
$
61,011

Accounts receivable — net
89,997

 
85,113

Inventories — net
187,886

 
170,009

Prepaid and other current assets
12,550

 
16,777

Total current assets
315,129

 
332,910

 
 
 
 
Pension asset
2,939

 
—

Purchased intangibles — net
14,565

 
15,225

Goodwill
84,412

 
164,112

Deferred income taxes
24,892

 
40,016

Other assets
9,627

 
9,514

Property, plant and equipment — net
265,675

 
256,392

Total assets
$
717,239

 
$
818,169

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY:
 
 
 
Accounts payable
$
78,346

 
$
71,582

Salaries and wages
27,409

 
27,018

Accrued liabilities
43,223

 
41,807

Accrued income taxes
1,862

 
1,384

Pension liability (current portion)
2,185

 
2,461

Non-pension post-retirement benefits (current portion)
4,185

 
4,892

Derivative liability
697

 
1,928

Long-term debt due within one year
7,485

 
5,009

Total current liabilities
165,392

 
156,081

Long-term debt
376,905

 
402,831

Pension liability
43,555

 
43,934

Non-pension post-retirement benefits
49,758

 
55,373

Deferred income taxes
1,850

 
1,859

Other long-term liabilities
12,885

 
12,972

Total liabilities
650,345

 
673,050

 
 
 
 
Common stock and capital in excess of par value
333,231

 
329,941

Retained deficit
(161,165
)
 
(59,625
)
Accumulated other comprehensive loss
(105,172
)
 
(125,197
)
Total shareholders’ equity
66,894

 
145,119

Total liabilities and shareholders’ equity
$
717,239

 
$
818,169



Libbey Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
(unaudited)
 
 
 
 
 
Year ended December 31,
 
2017
 
2016
Operating activities:
 
 
 
Net income (loss)
$
(93,368
)
 
$
10,073

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
45,544

 
48,486

Goodwill impairment
79,700

 
—

Loss on asset sales and disposals
251

 
287

Change in accounts receivable
(2,698
)
 
8,660

Change in inventories
(13,443
)
 
5,979

Change in accounts payable
5,574

 
(481
)
Accrued interest and amortization of discounts and finance fees
1,318

 
(1,086
)
Pension & non-pension post-retirement benefits, net
1,680

 
(2,513
)
Accrued liabilities & prepaid expenses
2,737

 
4,032

Income taxes
13,121

 
6,296

Share-based compensation expense
3,460

 
4,766

Other operating activities
1,432

 
(595
)
Net cash provided by operating activities
45,308

 
83,904

 
 
 
 
Investing activities:
 
 
 
Additions to property, plant and equipment
(47,628
)
 
(34,604
)
Net cash used in investing activities
(47,628
)
 
(34,604
)
 
 
 
 
Financing activities:
 

 
 

Borrowings on ABL credit facility
34,086

 
6,000

Repayments on ABL credit facility
(34,086
)
 
(6,000
)
Other repayments
(632
)
 
(350
)
Other borrowings
—

 
339

Repayments on Term Loan B
(24,400
)
 
(24,400
)
Stock options exercised
466

 
1,400

Taxes paid on distribution of equity awards
(627
)
 
(895
)
Dividends
(10,355
)
 
(10,070
)
Treasury shares purchased
—

 
(2,000
)
Other financing activities
334

 
—

Net cash used in financing activities
(35,214
)
 
(35,976
)
 
 
 
 
Effect of exchange rate fluctuations on cash
1,219

 
(1,357
)
Increase (decrease) in cash
(36,315
)
 
11,967

 
 
 
 
Cash & cash equivalents at beginning of year
61,011

 
49,044

Cash & cash equivalents at end of year
$
24,696

 
$
61,011




In accordance with the SEC’s Regulation G, the following tables provide non-GAAP measures used in this earnings release and a reconciliation to the most closely related U.S. GAAP measure. See the above text for additional information on our non-GAAP measures. Although Libbey believes that the non-GAAP financial measures presented enhance investors' understanding of Libbey's business and performance, these non-GAAP measures should not be considered an alternative to U.S. GAAP.
Table 1
 
 
 
 
 
 
 
 
Reconciliation of Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
(dollars in thousands)
 
 
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three months ended December 31,
 
Year ended December 31,
 
 
2017
 
2016
 
2017
 
2016
Reported net income (loss) (U.S. GAAP)
 
$
(7,151
)
 
$
(2,249
)
 
$
(93,368
)
 
$
10,073

Add:
 
 
 
 
 
 
 
 
   Interest expense
 
5,277

 
5,259

 
20,400

 
20,888

   Provision for income taxes
 
14,133

 
5,708

 
15,798

 
17,711

   Depreciation and amortization
 
11,928

 
11,817

 
45,544

 
48,486

Add special items before interest and taxes:
 
 
 
 
 
 
 
 
   Goodwill impairment (1)
 
—

 
—

 
79,700

 
—

   Product portfolio optimization (2)
 
—

 
(1,091
)
 
—

 
5,693

   Reorganization charges (3)
 
—

 
—

 
2,488

 
—

   Executive terminations
 
—

 
(61
)
 
—

 
4,460

   Pension settlement
 
—

 
(44
)
 
—

 
168

Work Stoppage (4)
 
—

 
4,162

 
—

 
4,162

Adjusted EBITDA (non-GAAP)
 
$
24,187

 
$
23,501

 
$
70,562

 
$
111,641

 
 
 
 
 
 
 
 
 
Net sales
 
$
223,981

 
$
205,838

 
$
781,828

 
$
793,420

Net income (loss) margin (U.S. GAAP)
 
(3.2
)%
 
(1.1
)%
 
(11.9
)%
 
1.3
%
Adjusted EBITDA margin (non-GAAP)
 
10.8
 %
 
11.4
 %
 
9.0
 %
 
14.1
%
__________________
(1) Non-cash goodwill impairment charge recorded in our Mexico reporting unit within the Latin America segment.
(2) Product portfolio optimization relates to inventory reductions to simplify and improve our operations.
(3) Workforce reorganization as a part of our cost savings initiatives.
(4) Work stoppage relates to the lower production volume impact, shipping costs and other direct incremental expenses associated with the two-week Toledo, Ohio, work stoppage in the fourth quarter of 2016.

Table 2
 
 
 
 
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
(dollars in thousands)
 
 
 
 
(unaudited)
 
 
 
 
 
 
Year ended December 31,
 
 
2017
 
2016
Net cash provided by operating activities (U.S. GAAP)
 
$
45,308

 
$
83,904

Net cash used in investing activities (U.S. GAAP)
 
(47,628
)
 
(34,604
)
Free Cash Flow (non-GAAP)
 
$
(2,320
)
 
$
49,300

 
 
 
 
 


Table 3
 
 
 
 
 
 
Reconciliation to Trade Working Capital
 
 
(dollars in thousands)
 
 
 
 
 
 
(unaudited)
 
 
 
 
 
 
 
 
December 31, 2017
 
September 30, 2017
 
December 31, 2016
 
 
 
 
 
 
 
Accounts receivable — net
 
$
89,997

 
89,084

 
$
85,113

Inventories — net
 
187,886

 
200,181

 
170,009

Less: Accounts payable
 
78,346

 
73,645

 
71,582

Trade Working Capital (non-GAAP)
 
$
199,537

 
$
215,620

 
$
183,540



Table 4
 
 
 
 
 
 
 
 
Summary Business Segment Information
 
 
 
 
 
 
 
 
(dollars in thousands)
(unaudited)
 
Three months ended December 31,
 
Year ended December 31,
Net Sales:
 
2017
 
2016 (7)
 
2017
 
2016 (7)
 
 
 
 
 
 
 
 
U.S. & Canada (1)
 
$
138,345

 
$
127,915

 
$
481,797

 
$
482,296

Latin America (2)
 
41,758

 
36,418

 
144,322

 
151,389

EMEA (3)
 
36,796

 
33,533

 
126,924

 
126,591

Other (4)
 
7,082

 
7,972

 
28,785

 
33,144

Consolidated
 
$
223,981

 
$
205,838

 
$
781,828

 
$
793,420

 
 
 
 
 
 
 
 
 
Segment Earnings Before Interest & Taxes (Segment EBIT) (5) :
 
 
 
 
 
 
 
 
U.S. & Canada (1)
 
$
14,737

 
$
19,517

 
$
48,044

 
$
75,449

Latin America (2)
 
4,041

 
(2,643
)
 
6,590

 
12,583

EMEA (3)
 
2,733

 
1,354

 
1,321

 
1,387

Other (4)
 
(240
)
 
22

 
(3,838
)
 
1,001

Segment EBIT
 
$
21,271

 
$
18,250

 
$
52,117

 
$
90,420

 
 
 
 
 
 
 
 
 
Reconciliation of Segment EBIT to Net Income (Loss):
 
 
 
 
 
 
 
 
Segment EBIT
 
$
21,271

 
$
18,250

 
$
52,117

 
$
90,420

Retained corporate costs (6)
 
(9,012
)
 
(6,566
)
 
(27,099
)
 
(27,265
)
Goodwill impairment
 
—

 
—

 
(79,700
)
 
—

Pension settlement
 
—

 
44

 
—

 
(168
)
Reorganization charges
 
—

 
—

 
(2,488
)
 
—

Product portfolio optimization
 
—

 
1,091

 
—

 
(5,693
)
Executive terminations
 
—

 
61

 
—

 
(4,460
)
Work stoppage
 
—

 
(4,162
)
 
—

 
(4,162
)
Interest expense
 
(5,277
)
 
(5,259
)
 
(20,400
)
 
(20,888
)
Provision for income taxes
 
(14,133
)
 
(5,708
)
 
(15,798
)
 
(17,711
)
Net income (loss)
 
$
(7,151
)
 
$
(2,249
)
 
$
(93,368
)
 
$
10,073

 
 
 
 
 
 
 
 
 
Depreciation & Amortization:
 
 
 
 
 
 
 
 
U.S. & Canada (1)
 
$
3,649

 
$
3,030

 
$
12,665

 
$
12,748

Latin America (2)
 
4,819

 
5,343

 
18,576

 
19,068

EMEA (3)
 
1,869

 
1,717

 
7,377

 
9,377

Other (4)
 
1,267

 
1,426

 
5,088

 
5,588

Corporate
 
324

 
301

 
1,838

 
1,705

Consolidated
 
$
11,928

 
$
11,817

 
$
45,544

 
$
48,486

(1) U.S. & Canada—includes sales of manufactured and sourced tableware having an end-market destination in the U.S and Canada, excluding glass products for Original Equipment Manufacturers (OEM), which remain in the Latin America segment.
(2) Latin America—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Latin America, as well as glass products for OEMs regardless of end-market destination.
(3) EMEA—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Europe, the Middle East and Africa.
(4) Other—includes primarily sales of manufactured and sourced glass tableware having an end-market destination in Asia Pacific.
(5) Segment EBIT represents earnings before interest and taxes and excludes amounts related to certain items we consider not representative of ongoing operations as well as certain retained corporate costs and other allocations that are not considered by management when evaluating performance. Segment EBIT also includes an allocation of manufacturing costs for inventory produced at a Libbey facility that is located in a region other than the end market in which the inventory is sold. This allocation can fluctuate from year to year based on the relative demands for products produced in regions other than the end markets in which they are sold.
(6) Retained corporate costs include certain headquarter, administrative and facility costs, and other costs that are not allocable to the reporting segments.
(7) In the first quarter of 2017, net sales and related costs for certain countries were reclassified between segments to align with changes in business unit responsibilities. Accordingly, 2016 segment results have been reclassified to conform to the current year structure. The revised 2016 segment results do not affect any previously reported consolidated financial results.


Table 5
 
 
 
Reconciliation of Net Income (Loss) to Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) and Debt Net of Cash to Adjusted EBITDA Ratio
(dollars in thousands)
 
 
 
(unaudited)
 
 
 
 
Year ended
December 31, 2017
 
Year ended
December 31, 2016
 
 
Reported net income (loss) (U.S. GAAP)
$
(93,368
)
 
$
10,073

Add:
 
 
 
   Interest expense
20,400

 
20,888

   Provision for income taxes
15,798

 
17,711

   Depreciation and amortization
45,544

 
48,486

   Special items before interest and taxes
82,188

 
14,483

Adjusted EBITDA (non-GAAP)
$
70,562

 
$
111,641

 
 
 
 
Reported debt on balance sheet (U.S. GAAP)
$
384,390

 
$
407,840

   Plus: Unamortized discount and finance fees
3,295

 
4,480

Gross debt
387,685

 
412,320

   Less: Cash and cash equivalents
24,696

 
61,011

Debt net of cash
$
362,989

 
$
351,309



 

Debt Net of Cash to Adjusted EBITDA Ratio (non-GAAP)
5.1

 
3.1


Table 6
 
 
 
2018 Outlook
 
 
 
Reconciliation of Net Income (Loss) margin to Adjusted EBITDA Margin
 
 
(percent of estimated 2018 net sales)
 
 
 
(unaudited)
 
 
 
 
Outlook for the six months ended June 30, 2018
 
Outlook for the year ended December 31, 2018
Net income (loss) margin (U.S. GAAP)
(0.2%) - 0.5%

 
1.0% - 1.6%

Add:
 
 
 
   Interest expense
2.8%

 
2.7%

   Provision for income taxes
(0.1%) - 0.2%

 
0.6% - 1.0%

   Depreciation and amortization
6.0%

 
5.7%

   Special items before interest and taxes
—
%
 
—
%
Adjusted EBITDA Margin (non-GAAP)
8.5% - 9.5%

 
10.0% - 11.0%


Table 7
 
 
Adjusted SG&A Margin
(percent of net sales)
 
 
 
 
(unaudited)
 
 
 
 
 
 
Year ended
December 31, 2017
 
Year ended
December 31, 2016
SG&A margin (U.S. GAAP)
 
16.0
 %
 
15.2
 %
Deduct special items in SG&A expenses:
 
 
 
 
   Executive terminations
 
—
 %
 
(0.5
)%
   Reorganization charges
 
(0.3
)%
 
—
 %
Adjusted SG&A Margin (non-GAAP)
 
15.7
 %
 
14.7
 %